SBJ/Aug. 18-24, 2014/Franchises

No ‘gaping holes’ as Ballmer leads Clippers

Despite a summer of litigation and unprecedented off-the-court headlines, the Los Angeles Clippers have emerged relatively unscathed financially as new owner Steve Ballmer now officially takes charge of the franchise.

“There are not any gaping holes,” said Dick Parsons, the former Time Warner chief executive officer who was hired by the NBA to restore order to the Clippers after former owner Donald Sterling was banned from the league for life in late April following disclosure of his racist comments. “Sales are pretty good, and we are almost up on a revenue basis.”

Dick Parsons was hired by the NBA to restore order to the Clippers.
Photo by: Enter Name Here

The NBA officially approved Ballmer’s purchase of the Clippers last week. That finalized a deal originally announced in late May.

Parsons did not provide specifics, but based on financial data from the sales book for the franchise issued earlier this year by Bank of America, the Clippers had a projected $112 million in total team revenue in fiscal 2014, a period that ended in June. Total operating revenue, which includes the team’s share of leaguewide television revenue, was projected at $164 million.

Bank of America was hired by Sterling’s estranged wife, Shelly, to help sell the team.

The Clippers, Parsons said, have a front-office head count of 110 employees, about the same as before the Sterling controversy. Of course, that staff count is minus former

longtime team President Andy Roeser, who left the team on May 6, when the NBA announced he was taking an indefinite leave of absence. But the 110 head count is on the low end of NBA front-office staffing.

“Typically, teams have between 120 and 140, but the Clippers don’t own their own arena,” said Bill Sutton, president of industry consultancy Bill Sutton & Associates, which counts NBA teams as clients.

Looking at the Clippers’ business areas, the team’s season-ticket renewal rate is at about 85 percent.“Everyone has hung on, and season-ticket holders don’t want to give up their seats,” Parsons said.

Similarly, most of the team sponsors have remained with the franchise, though Parsons said there are one or two that are undecided on returning.

Those points both speak to the fact that the outrage this summer in Los Angeles (and nationally) was directed at the now-former owner more than the team itself. This is, after all, a team that’s made the playoffs the past three seasons and boasts two of the league’s stars: Chris Paul and Blake Griffin. Add in popular coach Doc Rivers, and fans and sponsors weren’t looking to distance themselves from the franchise as much as they were to get away from a Sterling-run team.

Parsons said he tried to be in the team’s offices at least once a week over these past several months. His chief of staff, Payne Brown, was in the team’s offices five days a week.

Parsons will remain as interim chief executive for up to a month to help the franchise’s transition to new ownership, but he said Ballmer will waste little time putting his own stamp on the team. That includes the likely hiring of a new president and making moves in other areas — particularly focusing on the team’s digital marketing area.

“That’s something Donald never invested in,” Parsons said.

Ballmer was not available for comment late last week.

“[Ballmer’s] initial moves will be to figure out the operating dynamics of the business so he can figure out what he wants in terms of permanent management,” Parsons added. “My advice is to figure out where major drivers of the business are and get closer to Doc Rivers and the players so there is affinity. This is not a gigantic business. Obviously, this is a talent-sensitive business. It is not an overly complicated business. He will very quickly get his arms around it.”

One major issue that will be critical in helping Ballmer justify his record $2 billion purchase of the franchise is pursuit of a new local cable television deal. The team’s current deal with Prime Ticket ends after the 2015-16 season. According to Bank of America’s sales prospectus, the value of a deal is estimated to jump from the current $25 million annually to $125 million.

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